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Pound Drops Before Labour Figures Release

The pound is lower against the euro and the dollar after Bank of England official Adam Posen signaled that the central bank may need to increase its asset purchase program as British economic recovery falters. Posen said yesterday the BoE is not helping the economy by doing nothing and voted for the extension of the bond purchase by 100 billion pounds. So far Bank of England bought 200 billion pounds of bonds in the program that ended in 2010. Sterling was also under pressure on concern Europe’s debt crisis will undermine the recovery in UK as Eurozione is Britain’s major trading partner. Looking ahead to today, employment figures headline the economic calendar, with the expectations for the jobless claims to have risen by 35K in August and the ILO unemployment rate to remain unchanged at 7.9%.

The euro dropped against the dollar during the overnight trade on speculation Greece is nearing default. The single currency depreciated on concern that Greece’s debt concerns will increase borrowing costs for other countries in the region. Greek PM George Papandreou holds a conference call with German Chancellor Angela Merkel and French President Nicolas Sarcozy today to discuss developments in his nation and the euro area. Looking ahead to today, Eurozone Industrial Production headlines the economic calendar with the expectations for the figures to have increased by 1.5% in July after dropping by –0.7% in the previous month. 

The dollar gained against the broadly weaker euro but dropped against the yen ahead of the Retail Sales reports scheduled for today that are expected to add further signs of slowdown in the world’s largest economy. The advanced retail sales are expected to have risen only by 0.2% in August after reaching 0.5% in the previous reading. Also scheduled for today is the Producer Price Index, with the expectations for the figures to romaine unchanged at 0.2% from July.

Pound Lower Ahead of Bank of England Meeting

The pound continues to drop against its major counterparts this morning ahead of the Bank of England meeting today.  Overall, the economic data in the UK has been negative recently and that has certainly bolstered the case for more quantitative easing from the British central bank as global market strains worsen and the Bank may indeed decide to set aside inflation risks in favour of limiting threats to an already fragile economic recovery.  Although it is widely expected for BoE to keep the benchmark on hold, the market will be most interested in the fate of the asset-purchasing programme, which ended at GBP200bln in early 2010.  Additionally, it was reported that Italy has passed Berlusconi’s austerity plan as the second largest Eurozone debtor is attempting to convince the market that it is serious about lowering its debt and allaying fears regarding the sovereign debt issue plaguing some member states.   The USD has gained across the board today as Barack Obama will outline his proposals to spur job growth in the United States.  The dollar is also benefiting as investors increasingly believe that Obama’s plan will boost growth and lessen the chance of additional quantitative easing by the Fed.  Expect the pound to remain volatile but with a negative bias.   

 

Pound Lower After Poor Housing Data

The pound is lower across the board this morning, with the exception of the CHF after yesterday’s Swiss National Bank action, falling against the EUR and USD.  Sterling depreciated against the euro as a report showed that UK house prices fell more than economists predicted last month, thus bolstering the case for more quantitative easing from the Bank of England ahead of their monthly meeting tomorrow.  Additionally, Germany’s top court rejected constitutional challenges to the nation’s participation in the region’s rescue funds, providing more confidence that the Eurozone will be able to act more quickly with respect to bailouts of member states.  Today sees the release of Industrial and Manufacturing Production data, giving a better snapshot of the current UK economic recovery environment.  The expectation is that the pound will likely suffer further should this data disappoint.  The dollar is broadly stronger this morning as yesterday’s ISM Non-Manufacturing survey posted a better than expected result and indicated that the non-manufacturing sector of the US economy, which comprises 90% of the entire economy, grew over the month prior.  Expect the pound to remain volatile this week as market gauges economic recovery in Europe, UK and across the pond.  

 

Pound Mixed in Risk Averse Market

The pound is mixed this morning, as it rose against EUR but fell against the USD to start the week.  The euro is broadly weaker this morning as Angela Merkel’s ruling Christian Democratic Union suffered a defeat in her home state, an event which was perceived as euro-negative at a time when Merkel is facing criticism within her party regarding the handling of the Greek bailout.   This follows Friday’s news of suspension of talks between the Greek government representatives and  EU and IMF officials amid disagreements over how to bring down the Greek deficit gap down, which again seems to be falling short of the target.  Additional weight is being put on the EUR as a new bout of risk aversion has entered the picture and main benefactors of this sentiment are the USD, CHF and JPY.  The USD is higher as concerns are prompting investors to seek safe haven status of the greenback, despite the shocking non farm payrolls data released on Friday, which showed zero jobs added in August, putting a big question mark on job creation in the world’s largest economy.  With central bank meetings taking place in London and Frankfurt this week, the week is packed with economic releases in the UK as today kicks off with PMI Services survey, expected to post a measure of 54.0, followed by Manufacturing and Industrial production, house price data and Producer Price Index later this week.  

Pound Mixed Ahead of PMI Manufacturing Data

The pound is higher against EUR but lower against USD this morning.  Sterling is benefiting from this morning’s Eurozone manufacturing data result which showed that manufacturing industry contracted and added to fears that the economic recovery in the Eurozone is faltering.  Additionally, there is concern that collateral requirements by some member states, namely Finland, for the Greek bailout will make the process more costly and drawn out, thus stoking worries about the bailout scenario.  The USD is benefiting from European woes and the fact that the Bank of England may indeed engage in further quantitative easing.  Today in the UK we will see the release of PMI Manufacturing measure and the market is expecting a weak reading of 49 which would indicate a contraction in the sector and a worse than expected number will bring downward pressure against the pound.  Across the pond, today we will get a glimpse into the US labour market with continuing jobless claims and ISM Manufacturing later this afternoon.  All eyes will be on tomorrow’s Non Farm Payrolls data which is expected to show that the world’s largest economy added 70K jobs in August.